Beneficiary Trusts

Providing Protection for Beneficiaries with Beneficiary Trusts

Trusts provide protection for beneficiaries only as long as the assets remain in the trust. Once the money is distributed, it becomes vulnerable to creditors, spendthrift beneficiaries, ex-spouses, long-term care expenses and devastating tax consequences.

At Morris Hall, PLLC, our attorneys provide protections for beneficiaries that almost nobody else does. All of our revocable living trusts include language that, upon the death of the trustee, funds assets into a beneficiary trust prepared for your children, grandchildren, or other named beneficiaries. The beneficiary trust is not separate from the revocable living trust. It is simply a subtrust to protect the assets when the trustee dies. We are one of the few estate planning law firms in the southwestern United States to create beneficiary trusts.

Unfortunately, most trusts distribute assets to beneficiaries upon the death of the person who created the trust. Some trusts might delay the distribution a few years or until the beneficiaries reach a certain age. However, once the trust reaches that point, the assets are distributed, and all the benefits of having the money in a trust are gone.

Protecting Trust Assets From Creditors and Predators

Funding assets of your revocable living trust into a beneficiary trust basically puts those assets into Fort Knox and gives your beneficiaries the key. Your beneficiaries can use the money, but nobody else can touch it.

The trust assets do not become community property, so an ex-spouse cannot get at the assets

The assets in the trust are not titled to the beneficiary, so creditors cannot get at them, even in cases of bankruptcy or lawsuits

The assets are not subject to spend-down provisions for long-term care

In addition to providing protection from potential creditors, a beneficiary trust can protect your beneficiaries from themselves. Our attorneys can draft spendthrift provisions to provide limited access to funds until your beneficiaries are ready to control them.

Beneficiary trusts are sometimes called estate preservation trusts, century trusts or legacy trusts. Your beneficiaries serve as their own trustees, or you can name someone else as the trustee. Our law firm can serve as an advisor or as the trustee.

Our offices are located in Phoenix, Tucson, Albuquerque and communities throughout Arizona and New Mexico. Contact us to arrange a consultation with an experienced lawyer today.